Risky business: GMI identifies danger in some companies

Corporate governance watchdog Governance Metrics International (GMI) recently issued a report which highlights companies that exhibit ‘patterns of risk,’ and urges investors and corporate stakeholders to avoid investing in these ‘risky’ businesses.   

GMI rates companies based on their environmental, social and governance policies and most recently it added accounting transparency criteria to its ratings. According to the report, investors should avoid companies with the lowest ratings – at all costs

Companies making it onto GMI’s ‘Risk List’ include NewsCorp, Discovery Communications, EZCORP and Comstock Resources. 

GMI says there is little indication that NewsCorp has shown any signs of improved governance.

‘Unlike Discovery, which until now has been regarded as a Wall Street darling, NewsCorp has a long history as a governance problem child,’ confirms Anne Wright, a former chief ethics counsel and associate general counsel at the Financial Industry Regulatory Authority (FINRA). For years, [NewsCorp] has been graded ‘F’ by GMI (and GMI’s predecessor, Corporate Library) ‘only because there is no lower grade’ according to Nell Minow.’  

The report raises concerns about executive remuneration problems, board independence issues and ownership structure at the companies listed.

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